So... just got back from dropping off the monthly ROTH contribution and the house payment at the post office. With the stock market reminding everyone, this past week, that “yes Virginia” there are risks to investing I found quiet, consistent, comfort in my mortgage and ROTH check writing.
Again this month we sent a good size check to the ROTH account. The plan is to have it maxed with the check next month. It feels nice to be so close to fully funding the ROTH this early in the year. After we have funded this year’s ROTH we are planning on continuing to set money aside in order to have a good start on fully funding next year’s ROTH, you never know when your budget will change and ROTH dollars become harder to come by.
Again this month the mortgage check was bigger than it had to be. We were able to send extra enough that the principal reduction should be a little bit bigger than the interest accrued. Focused banging until it is knocked down, is what keeps clanging around my head. Not sure if we can, but if we keep up this level of payment then the house will be OURS in about thirteen more years. (that sounds so far away)
If you are sending extra on the house or working to fund your IRA then I would love to hear about your successes and challenges.
That’s it for today. Here’s to working the plan and to keeping an eye on your EveryDay Money.
Showing posts with label A little extra. Show all posts
Showing posts with label A little extra. Show all posts
Friday, March 02, 2007
Saturday, January 27, 2007
A little extra Part 3
Ok, I’ll admit I couldn’t do it. I know I said, back in Part 2, I was ready to strictly focus on fully funding the ROTHs this year before anything else… but. Today when I was writing out the bills I just “had” to send some extra to the mortgage. Last year I got into the habit and it just is hard to stop…inertia. Now don’t get me wrong I cut a nice size (at least for me) check to the ROTH. So all is not lost.
There are some legitimate reasons (at least I think of them as legitimate) behind my sticking with the extra payments. Let’s see, the last ten years of a thirty year mortgage the payments are mostly made up of principal. Since the payment is mostly principal then there will be less interest to deduct on the taxes. As the “experts” have said the tax deduction is a major reason that a mortgage is “good” debt. With so much less interest the last 10 years I guess it makes the last ten “less good” debt? Another reason I keep telling myself is that my wife and I already put about 15% or so of our pay away for retirement. If somewhere down the road we couldn’t put that percentage away then I would have to rethink the house extra. (No, really I would.) Also, if we didn’t have to pay a mortgage then we would need a fair amount less in income every month to maintain our lifestyle. Needing less income would give us both options in regards to job type and hours at work. With a baby coming in March those options might be worth lots down the road. In short I still equate a paid off house with freedom. Well maybe not freedom but at least choices.
I ran the numbers as best I could on a 30 year mortgage. If the amount that goes to principal is equal to the amount of interest each month then you can kill off a mortgage in about 15 years. So today I went back to my old, evil, money mismanagement ways and sent a check that matched principal reduction to interest accrued and took another full step closer to having more choices.
Are you sending extra to your mortgage even though you know investing that money “may” make better sense? Or do you still think that I have it wrong? Post a comment or drop me an e-mail. All feedback is appreciated.
That’s it for today. Here’s to finding a path that makes sense to you. And to keeping an eye on your EveryDay Money.
part 1
part 2
There are some legitimate reasons (at least I think of them as legitimate) behind my sticking with the extra payments. Let’s see, the last ten years of a thirty year mortgage the payments are mostly made up of principal. Since the payment is mostly principal then there will be less interest to deduct on the taxes. As the “experts” have said the tax deduction is a major reason that a mortgage is “good” debt. With so much less interest the last 10 years I guess it makes the last ten “less good” debt? Another reason I keep telling myself is that my wife and I already put about 15% or so of our pay away for retirement. If somewhere down the road we couldn’t put that percentage away then I would have to rethink the house extra. (No, really I would.) Also, if we didn’t have to pay a mortgage then we would need a fair amount less in income every month to maintain our lifestyle. Needing less income would give us both options in regards to job type and hours at work. With a baby coming in March those options might be worth lots down the road. In short I still equate a paid off house with freedom. Well maybe not freedom but at least choices.
I ran the numbers as best I could on a 30 year mortgage. If the amount that goes to principal is equal to the amount of interest each month then you can kill off a mortgage in about 15 years. So today I went back to my old, evil, money mismanagement ways and sent a check that matched principal reduction to interest accrued and took another full step closer to having more choices.
Are you sending extra to your mortgage even though you know investing that money “may” make better sense? Or do you still think that I have it wrong? Post a comment or drop me an e-mail. All feedback is appreciated.
That’s it for today. Here’s to finding a path that makes sense to you. And to keeping an eye on your EveryDay Money.
part 1
part 2
Thursday, December 28, 2006
A little extra pt. 2 (budgeting)
So here we are at the end of another month and the New Year rising fast to meet us. End of the month brings with it the ongoing cycle of bills. As I wrote in (part 1), several of my extra nickels and dimes get thrown as extra on my mortgage. It just rubs me to be in debt. Don’t get me wrong, I really like my house I just wish that ALL of it was my house. One day.
There was an interesting comment left on part 1. In short it wondered if I would not be better off to invest instead of paying extra on the house. Well I was pretty sure I knew the answer but after spending a morning with the calculator I found was wrong. It is far better, for me, to max out my ROTH than use that money as extra on the mortgage. The greatness comes in the tax free compounding. If I was putting that money somewhere that I had to pay taxes every year out of it then the benefits narrows.
It doesn’t really matter because I didn’t max out my ROTH this year. So here’s the bottom line starting in January I am shifting my primary focus to maxing my ROTH before sending extra to the house. (Mentally I am just going to have to adjust to seeing the mortgage drop slowly. I still hold out faith that I can get some extra on the house during the year. We’ll see.) I would like to take a minute and thank the person that left that comment. Your comment made me take a fresh look at the numbers; I appreciate your time in leaving the comment.
Do you max out your tax advantage accounts every year?
That’s it for today. Here’s to leaving interesting comments and to keeping an eye on your EveryDay Money.
part 1
part 3
There was an interesting comment left on part 1. In short it wondered if I would not be better off to invest instead of paying extra on the house. Well I was pretty sure I knew the answer but after spending a morning with the calculator I found was wrong. It is far better, for me, to max out my ROTH than use that money as extra on the mortgage. The greatness comes in the tax free compounding. If I was putting that money somewhere that I had to pay taxes every year out of it then the benefits narrows.
It doesn’t really matter because I didn’t max out my ROTH this year. So here’s the bottom line starting in January I am shifting my primary focus to maxing my ROTH before sending extra to the house. (Mentally I am just going to have to adjust to seeing the mortgage drop slowly. I still hold out faith that I can get some extra on the house during the year. We’ll see.) I would like to take a minute and thank the person that left that comment. Your comment made me take a fresh look at the numbers; I appreciate your time in leaving the comment.
Do you max out your tax advantage accounts every year?
That’s it for today. Here’s to leaving interesting comments and to keeping an eye on your EveryDay Money.
part 1
part 3
Sunday, December 03, 2006
A little extra (budgeting)
I blinked and November left me. It is the dawning of a new month and a new set of bills. The mortgage is still one that I write out by hand, no online banking for the house. Again this month we decided to send in a few extra nickels and dimes. Every little bit extra sent in goes straight to principal and pays the loan off earlier than designed.
Depending on your interest rate, I have read just one extra payment a year (13 instead of 12) gets your loan finished about 7 years early. That early finish saves you thousands of dollars in interest. Send in more and it goes away even faster. A side note. I have had friends ask me my feeling toward the bi-monthly payment programs that basically works out to an extra payment a year it is just someone else managing the effort. As Nancy Reagan once said, “Just say no.” Most of these programs charge some kind of fee. If you just send in extra every month on your own you accomplish the exact same thing only there is NO fee. (Check with you loan provider to see if you have to specify that the extra is to be applied on the principal or not.)
Sending in a little extra gives me a little feeling every month of goodness, of controlling my money and future. That’s why I still put it on a check. I like to see the extra in writing on paper. I joke with my wife that one day we are going to wake-up and there won’t be a house payment. I create grand ideas of what we will spend all that money on when we don’t have a house payment down the road. Those little visions keep me motivated every month. So again this month licking the envelope I thought the same thing as months past, here’s a little extra and one more step toward freedom.
Click comments and let me know if you do or don’t send in any extra and why?
That’s it for today. Remember; happen to things instead of always letting things happen to you. And as always keep your eye on your EveryDay Money.
part 2
part 3
Depending on your interest rate, I have read just one extra payment a year (13 instead of 12) gets your loan finished about 7 years early. That early finish saves you thousands of dollars in interest. Send in more and it goes away even faster. A side note. I have had friends ask me my feeling toward the bi-monthly payment programs that basically works out to an extra payment a year it is just someone else managing the effort. As Nancy Reagan once said, “Just say no.” Most of these programs charge some kind of fee. If you just send in extra every month on your own you accomplish the exact same thing only there is NO fee. (Check with you loan provider to see if you have to specify that the extra is to be applied on the principal or not.)
Sending in a little extra gives me a little feeling every month of goodness, of controlling my money and future. That’s why I still put it on a check. I like to see the extra in writing on paper. I joke with my wife that one day we are going to wake-up and there won’t be a house payment. I create grand ideas of what we will spend all that money on when we don’t have a house payment down the road. Those little visions keep me motivated every month. So again this month licking the envelope I thought the same thing as months past, here’s a little extra and one more step toward freedom.
Click comments and let me know if you do or don’t send in any extra and why?
That’s it for today. Remember; happen to things instead of always letting things happen to you. And as always keep your eye on your EveryDay Money.
part 2
part 3
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